Estate Planning Basics

A good estate plan helps protects your family and your property when you die or become incapacitated. Planning your estate generally includes: deciding who will get your things when you die, naming an executor to wrap up your affairs, naming guardians for your children and their property, avoiding probate, or preparing for a time when you may not be able to make your own financial or medical decisions.

To accomplish these goals, you may need a will, living trust, a living will, and powers of attorney. You probably won’t need all of these documents, and you may be able to make some or all of them yourself, without a lawyer. There is software available that can take care of all of these for you.

Use a basic will to decide who will get your property, name an executor to wrap up your affairs, and name guardians for your children and their property. Because these are essential estate planning goals, most people should make a will. If you don’t make a will or create some other plan to distribute your property, your state’s laws will decide where your property should go – usually to your spouse, children, or parents.

Get legal advice from an attorney if you want to place conditions on your gifts --for example, if you want to leave your savings to your daughter but only if she stays sober, or if you want to leave your house to your wife, but you want it to go to your sister after your wife dies. You may be able to make these kinds of limitations, but you’ll need a lawyer’s help.

Will language does not need to be complicated or convoluted – you should be able to understand every word.

Use a living trust to keep your property out of probate. Probate is the court process of distributing your property after your death. It can be expensive, time consuming, and very often a big hassle for the family. Most estates do not benefit from probate, so it makes sense for those estates to use probate-avoidance tools, like living trusts. When you make a living trust, you transfer property into the trust, name beneficiaries for that property, and name someone to be trustee of the trust. When you die, the trustee simply transfers the property to the people you named – no probate court required.

See Creating A Living Trust for more details about these.

Use a financial power of attorney to name someone to take care of your finances when you aren’t able to. If you make your power of attorney “durable” it will continue to be valid even if you become incapacitated. You can also make powers of attorney that aren’t durable – these are useful for specific needs, like giving your brother the ability to sign checks for you while you’re out of the country. However, you will want your power of attorney to be durable if you anticipate that there may be a time when someone else may need to take over your financial affairs because you are unwell.

When you make a financial durable power of attorney, you name someone to be your “attorney-in-fact” (or, in many states your “agent”) and you also state exactly what powers you want that person to have. Because your attorney-in-fact will have control of your finances, it is essential that you name someone you trust completely.

You can make a financial power of attorney yourself if you know what powers you want to give your attorney-in-fact and if you use quality self-help tools. Good self-help tools will explain the pros and cons of each power and how to finalize your document to make it legal. Like wills and living trusts, you should easily understand your power of attorney; it does not need to contain complex or confusing language. If your power of attorney is not clear to you, find another self-help resource or consult an attorney for help.

Use a healthcare directive to do two things: 1) name a person who will make health care decisions for you when you cannot, and 2) state your wishes for health care, organ donation and final arrangements. See Creating Living Wills for more details about these.

Most of the aforementioned documents can be prepared without a lawyer. Use quality self help resources, so take some time to shop around for the tools that fit your needs and circumstances. Make sure the resources you use are specific to your state, explain your options, and are clear to you.

 

 

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